“Social Impact Bonds” for Chicago’s Early Childhood Education” – Privatization to the nth Degree?
Emanuel’s early childhood plan compared to parking meter deal
MON, 11/03/2014 – 2:11PM
Mayor Rahm Emanuel’s plan to use a pay-for-performance financing method known as “Social Impact Bonds” to give 2,618 children access to early childhood education cleared a key legislative hurdle Monday despite comparisons to the widely-despised parking meter deal.
The Chicago Teachers Union, SEIU Healthcare Illinois and their City Council allies condemned the arrangement because it will allow Goldman Sachs, Northern Trust and the Pritzker Family Foundation to more than double their $17 million investment over 18 years.
The bond program advanced Monday by the City Council’s Finance Committee is in the form of a loan from the Goldman Sachs Social Impact Fund and Northern Trust as senior lenders. Subordinate lenders are the J.B. and M.K. Pritzker Family Foundation.
“This is basically privatizing Head Start — giving these banking companies a very high rate of return — higher than even what we saw in the Infrastructure Trust,” said Ald. Scott Waguespack (32nd), one of a handful of aldermen who voted no.
