Part 7 of 7 in the Series: Education in the Cloud. Introduction at: https://wrenchinthegears.com/2017/07/13/smart-cities-social-impact-bonds-public-educations-hostile-takeover-part-ii/

1. Education in the Cloud
Digital Classrooms as Data Factories
What is a “Smart” City?
Learning Ecosystems and the Internet of Things
Blockchain and “The Ledger”
How Austerity Generates Data
Reinventing Education for Impact Investment

2. Moving forward we’ll be hearing a lot about efficacy and impact.
This has to do with education being pulled into global
financial markets. As public funding for public education
evaporates, doors are opened for venture philanthropy.
Impact Investing is a major force behind ed-tech investments
In 2012 a new vehicle for venture philanthropy was
introduced to the US from the UK-Social Impact Bonds or
Pay for Success.
Source
Source

3. Their Jefferson Learning Accelerator acts as a matchmaker for
school districts and ed-tech.
UVA’s Curry School hosted an Ed-Tech Efficacy forum in May 2017.
Students are being used
to beta-test programs
with no IRB protocols in
place. Source

4. Measuring efficacy will focus on the impact of ed-tech. As a
result, teachers must become peripheral “guides on the side.”
Offline human instruction doesn’t
deliver data in a form that satisfies
the market’s demand for “impact.”
Nor does it facilitate human capital
management.
Moving forward, learning that
takes place offline with no record
of it being uploaded to the cloud
will become more and more rare.

5. When you see “impact” think “venture capital.”
There is a burgeoning network of
accelerators coming online to provide
technical support, work space and
working capital to scale ed-tech start
ups.
As the ed-tech conversion gains steam,
reformers will want to direct the
conversation towards identifying the
“good” programs.
No one will be asking whether or not
digital education is a good idea. They
simply want to demonstrate “impact” so
they can net a financial return on their
investments. Source

6. Social Impact Investing
The Global Impact Investing Network (GIIN) defines
it as: investments made into organizations,
companies and funds with the intention to
generate social and environmental impact
alongside financial return. Source
In 2013, the Harvard Business Review predicted that
social impact investing would be the next venture
capital. Source
In 2015, the IRS announced that foundations could
invest endowment funds into mission related
investments (MRIs) without penalty. Source
As a result the impact investment sector is
anticipated to grow significantly in coming years.
In 2015, 156 entities reported $77.4 billion in
impact investment assets. Source

7. The Wharton Business School at the University of
Pennsylvania is a big supporter of social impact investing.
Judith Rodin left UPenn to run
the Rockefeller Foundation.
Under her leadership the
foundation created GIIN,
promoted impact investing
and brought social impact
bonds to the US.

8. Education “Impact Investment Opportunities”
K-12 Badging Systems
Teacher Credentialing
Innovation School Models
Educational Games
Social Emotional Learning
New Assessment Systems
“Student-Centered” Learning
Programs
Early Learning ProgramsImpact Investment Opportunities from “Get Smart.”
Source

9. Impact is evaluated according to education data.
The creation of Statewide
Longitudinal Data Systems
started in 2005. All but
three states have taken
some action towards
building SLDS
infrastructure.
Education impact
investments have been
linked to pre-k, early
literacy, and workforce
placement outcomes. For
that reason data needs to
be gathered from P-20.Source

10. Huge datasets are being used for economic and labor projections.
This is education as
human capital
management.
Will this data be used to
profile students?
And with increased
automation does it
even make sense to try
and predict what the
labor market will look
like a decade hence? SourceEducation should NOT be about human capital.

11. And the Coalition on Evidence-Based Policy Making wants to
create a national unit record system to consolidate the data.
Among those testifying in favor of
this the national unit record
system at an October 2016
hearing was David Medina, co-
founder of Results for America.
Results for America has lobbied
for the expansion of “Pay for
Success” programs nationally.
Source

12. Accessible, aggregated student data is needed to streamline
evaluation of pay for success and social impact bond deals.
Everyone loves data, including Booz Allen Hamilton who sent a representative to testify in favor of the national unit record system.
Source
More HERE

13. What is a social impact bond?
A social impact bond is a mechanism through which a
government decides to fund a public program using private
capital. The program is also called “Pay for Success.”
An agreement is drawn up stipulating required outcomes that
define program “success.”
A “successful” outcome, in theory, saves the government money
in the future.
If a third party determines that the program has met the
specified outcomes, the investor is rewarded with a portion of
the anticipated future cost savings as specified the SIB “deal.”

14. Translating Plain English: Can the Peterborough
Social Impact Bond Construct Apply Stateside?
Drew von Glahn and Caroline Whistler, Third
Sector Capital Partners, 2011
“Fit with Issue-Area Priorities: As the bonds unite
private investors or philanthropists with
government entities, alignment with issue areas
is critical. Sectors such as education and
workforce development are two areas in which
local and federal governments have a vested
interest in both increasing social outcomes and
the efficiency of public funds spent. Strong
government benefits will help attract public
sector partners.”
Source
SIB promoters are targeting education.

15. Provisions for “Pay for Success” are in the ESSA.
In October 2016
the US Department
of Education
issued the first two
Pay for Success
deals authorized
under new ESSA
regulations.
Source

16. Likely Deal Types
Pre-K
Early Literacy
Workforce Development

17. Knowledgeworks
supports the
learning ecosystem
model.
Will Pay For Success / SIBs
be used to underwrite this
“transformation?”
Source

18. Social Impact Bonds and Pay for Success have been promoted
by America Forward, the policy arm of New Profit.
New Profit is a venture
philanthropy fund that seeks to
“reimagine learning.” They are
heavily invested in programs that
promote digital education.
Source

19. Utah Pre-K Social Impact Bond raises concerns.
The premise was that providing access to preschool
would reduce future expenditures in special
education. Students were screened, and at-risk
children were identified and provided with access to
preschool.
When the students registered for kindergarten, the
program claimed 99% did NOT require special
education services. However, even the best
programs would only have been expected to reduce
the need for such services by 10-20%.
Additionally, Goldman Sachs only paid a fraction of what a high-quality preschool actually costs.
It is unclear if the “success” of the program involved pulling in students who would never have needed
services or if services were being denied to students who genuinely needed them.
Source

20. “Quality” provides cover for data-mining babies and toddlers.
Many cities are considering using Social impact bonds or
pay for success programs to expand access to universal
pre-k. As a result pre-k programs are becoming
increasingly data-driven and technology dependent.
Intrusive programs like TS Gold are building student
“growth” profiles that could ultimately be used to
evaluate social impact bond deals by third parties.
Access to imaginative play, manipulatives and physical
activity will be reduced as more and more device-
mediated activities come into classrooms.
Education is remade to serve the needs of big data.

21. Students
Generate Data
Dashboards
Aggregate Data
Devices, Apps,
LMSs & Sensors
Transmit Data
IoT
Credentials and
Competencies
Registered on
Blockchain
Ledgers
Social Impact
Investments
Seed Ed-Tech
Data Informs
Human Capital
Management
Predictive
Analytics
Blockchain Smart
Contracts Trigger
Digital Payments
Classrooms as Data Factories

22. By allowing big data to rule our classrooms we are
normalizing the surveillance of childhood.
Source
Just because evidence of learning is not uploaded to the cloud, doesn’t mean it didn’t happen.

23. People are working to bring SIBs and PFS to scale.
Rate cards are being developed to streamline the process.
In 2016. Social Finance
developed rate cards that would
permit multiple pay for success
deals to be issued at once.
Source

24. In 2016 the first social
impact bond on
blockchain was issued.
UBS, the Swiss bank, donated code used to issue a “smart contract” social
impact bond in support of HIV research on the blockchain.
If they are successful issuing “smart contracts” for social impact bonds on the
blockchain, private interests could enter into education deals that establish
parameters of “success” that are actually very harmful to children.
The voices of parents, teachers, students and community members would be
entirely shut out. Public education will be outsourced entire to venture capital.
Source

25. Neighborhood
Schools
Student
“Personalized” Pathway
Weighted Funding Follows Student
Blockchain
Automated Smart
Blockchain Contracts
Badges
Certifications
Skills
Social Traits
Competencies Logged In
The Ledger
Trigger Payments to
Educational Provider
ESA
Educational Savings Accounts
$ $
Work-Based
Learning
Online
Gaming
Makerspace
Projects
Service
Learning
Cyber
Courses
Private
Instruction
Museum
Programs

26. Could we be approaching peak financialization?
If rate cards and PFS “smart
contracts” become accepted
vehicles of municipal finance,
we could be looking at a future
where “public” education
becomes largely dependent on
private capital. Putting “smart”
contracts on the blockchain
further automates the process
and restricts opportunities for
human intervention once the
deal is initiated.
Source

27. In addition to the net profit of each Pay for Success
deal,
there is additional money to be made on speculation.

28. Investors plan to securitize social impact bonds.
Venture capital takes advantage of ongoing austerity conditions in the
public sector to “invest” in early childhood and education SIBS.
THEN those SIBs can be grouped into asset backed securities that can be
traded in the global financial marketplace. Voila, a new futures market!

29. Data-driven education is dynamic.
Asset Backed Securities (aggregated SIBs) would be the basis for a new
derivatives market.
With derivatives, investors make a bet with another party on whether the
price of the underlying asset will go up or down.
Imagine derivatives composed of SIBs for a group of districts. You could bet
on whether the education would improve or decline. That is why “growth” and
ongoing formative assessments are required. Real time flows of data
encourage continuous betting on educational outcomes.

30. When everything tanks...
Credit default swaps are used as insurance against defaults on a credit event.
It is pretty clear that digital education will not be tenable over the long run.
Those who can secure credit defaults swaps and accurately predict market
failure will end up securing the highest returns.
Digital education is being set up to be the next “Big Short.”

31. Constant flow of student DATA via
dashboards informs investment risk.
Digital Education
Impact Investors Seed Ed-Tech
Sell Hardware & Software & Generate DATA
Neighborhood
Schools
Virtual
Schools
Out-of-School
Time
Charter
Schools
Dynamic, data-driven
education becomes a
speculative
commodity of global
financial markets.
Blended Learning
Will dashboards influence risk predictions on securitized SIBs?

32. Social Impact
Investments
Seed Ed-Tech &
“Smart”
Classrooms
Derivatives
Markets Built on
Education Data
Speculation
Education
Investments
Securitized
Credit Default Swaps
= Profit for Some
When The System
Fails
Digital Education =
The Next “Big Short”
What might a futures market in
education data look like?

33. AI-Driven Philanthropy
What might the implications be for linking
blockchain smart contracts to charitable transfers?
Is there potential for AI block-box algorithms to play
a role in automated disbursement of philanthropic
capital?
Could data from the Internet of Things feed such
algorithms and shape decisions about where funds
are directed?
Could such a process further automate education,
preferencing platforms that deliver data tailored to
IoT distribution?
Charities Aid Foundation, a UK based philanthropy that is
involved in social impact investing and social impact bonds,
prepared the above whitepaper that discusses the intersection
of blockchain technology and the future of charitable giving.
Source

34. Dates of Note
2007-Social Finance UK created to develop SIBs.
2010-The first social impact bond was launched in the
UK at Peterborough Prison.
2011-Social Impact Bond lab set up at Harvard with
support of Rockefeller Foundation.
2012-First US social impact bond deal set up in New
York on Rikers Island.
2013-Meeting of the Minds floats the idea of using
Social Impact Bonds to fund “Smart” City projects.
2016-Social Innovation Fund hires Social Finance to
create rate cards to scale social impact bonds.
2016-UBS donates code for blockchain “smart
contracts” that create a social impact bond vehicle in
support of HIV research.
Source