Will the mid-term elections help further promote SIB structures? That would be a most positive outcome for everybody and we hope that at least bipartisanship can help push forward (as it has to date) on this front.
Today we have three articles from the wonderful windy city which is at an intriguing crossroads. The state government has often been, er, patchy at actually delivering decent services without various foibles (nepotism through outright corruption has often plagued the Gubernatorial mansion alone) and while incumbent Governor Pat Quinn has yet to concede, it looks as if a private equity fund manager from Chicago, Bruce Rauner will take over. Now Mayor Emanuel is in the crosshairs of various left-oriented vested interests overnight for his promotion of PFS/SIB structures. Yet with straitened finances I can’t see any other way forward for Chicago or Illinois – not only is Rahm Emanuel to be applauded for his vision and political bravery taking on vested interests but equally, Rauner ought to grasp PFS immediately and that could make the state a fascinating candidate for improved services through SIBs.
Well that’s my sunny disposition for today anyway, three interesting articles with conflicting perspectives today:
Emanuel Preschool Plan Could Double Cost, Boost Investor Profits
Hal Dardick – Chicago Tribune
A proposed expansion of a CPS preschool program drew praise from aldermen Monday for its aims but also was criticized because the city could end up paying investors in the program roughly double its $17 million cost.
CFO Lois Scott told aldermen at a City Council Finance Committee meeting that borrowing through so-called social impact bonds, which link payback to lenders on the success of the initiatives being funded, could provide a rate of return of about 6.3 percent to investors. That translates to $34.5 million in repayments over the next 18 years, she said.
Critics Call Emanuel’s Pre-K Program ‘Privatizing Head Start’
Chicagoist
A proposal from Mayor Rahm Emanuel to expand early childhood educational opportunities was approved by the City Council Finance Committee Monday, even as it was revealed the method for funding the expansion could wind up being a financial windfall for investors and drawing comparisons to the much-maligned parking meter privatization deal.
Opinion: City Places Investors Ahead Of Kids With Social Impact Bonds
Mark W. Anderson – NBC Chicago
If there’s one thing we know about Wall Street, it’s that most Wall Street firms are not in the business of philanthropy.
Yet the city is about to enter into a $30 million agreement with several Wall Street lenders to finance an early education program that from all appearances will allow banks to profit off the educational success of children with almost no risk to their own bottom lines.