A new chapter in Pay for Success: The case of Legacy Early College

By Megan Carolan, Director of Policy Research & Brittany Timmons, Legacy Project Consultant

In late 2016, Legacy Early College, a charter school in Greenville, S.C., was awarded a federal Pay for Success feasibility study grant to explore expanding its K-12 options to include 3K/4K classes. ICS was chosen as the feasibility study partner on this project and has been engaged with this unique program in our hometown over the last 18 months to assess the feasibility of this option.

Legacy presents a unique case for PFS for a number of reasons – most notably, it is to our knowledge the first charter school program to specifically engage in a feasibility study, charting new waters for this type of school. It was the only charter school funded by the competitively-awarded Department of Education grants to fund this study. ICS and Legacy entered the project with the goal of expanding much-needed services to the traditionally underserved population of Legacy scholars; but both entities had a broader goal as well, of charting a course for all charter schools interested in this model.

Legacy has several attributes which make it unique within South Carolina:

College readiness: As an early college charter school, Legacy is particularly focused on high school graduation rates, college enrollment, and college graduation, a focus which begins even in the early elementary grades. More than half of Legacy scholars live below the Federal Poverty Level; 100% percent of scholars receive free lunch.

Legacy views high-quality early childhood education as an essential first step towards the long-term goals for scholars’ success in their academic careers and beyond. One hundred percent of Legacy’s graduating seniors have been accepted to college. Comparatively, across the “Legacy Zone” (the three Census tracts neighboring the school), an average of 40 percent of adults over age 25 do not have a high school diploma.

Health and fitness: Legacy serves all scholars two healthy meals per day that exceed USDA standards and guidelines for healthy eating, with supper also provided for scholars in the extended day (afterschool) program. Legacy Early College is the only school in South Carolina that requires daily physical education for all scholars in K-12. Annual evaluations of Legacy’s physical fitness program show that Legacy scholars have increased cognitive and physical fitness measures compared to students in schools who do not have daily physical education.

This project benefited enormously from the high-quality partners at the table.

We concluded that PFS is not a feasible mechanism for funding a 3K/4K expansion at Legacy Early College based on the current lack of outcome payors – a common refrain we hear from others in the field as well. We’re exploring promising initiatives designed to help support this project financially. There is still a long way to go in making this deserving project a reality.

Enacted in 2018, Social Impact Partnership to Pay for Results Act (SIPPRA) allows the federal government to engage in PFS projects in new ways, including as a potential outcomes payor. The bill does so by creating a $100 million federal fund, administered by the Treasury Department, half of which must benefit children. The first round of grant applications under this fund were due in May 2019. The grant guidelines clarified that the grant is targeting programs that create short-term federal savings, allowing those programs that do so to recapture some or all of the savings they create. This is the first wave of funding under SIPPRA – focused just on federal contributions to outcomes payment. There is an anticipated round of funds for feasibility studies at a later not-yet-announced date. Also, we are hopeful that further rounds of both types of funding will be available in future years, though that is not yet confirmed.

At the state level, South Carolina has been actively exploring a Pay for Success Outcomes Fund, which would create a mechanism for state funds being used for outcome payment in PFS projects. The bill did not pass in the 2018 legislative session as a result of other items occupying legislators’ time; it came very close to passing in 2019 (passing in the Senate). Given the successes of the last two years, we expect a great deal of legislative knowledge and interest in the next session. The fund is intended as a mechanism for the General Assembly and state agencies to be able to invest in outcomes-based financing—but not a funding source itself. Importantly, by creating this structure, it would overcome any legal challenges to an agency engaging in an outcomes-based contract.

While the Legacy project was unable to locate outcome payors, all other feasibility indicators on this project were positive; Legacy could be well-suited to introduce 4K programming through more traditional philanthropic financing. Legacy continues to work toward their goal of bringing high-quality early childhood education to its scholars and catalyzing their futures. The school has released this compelling video on the Legacy model, the need for early childhood intervention, and the exiting role PFS can play. Legacy is embarking on work to identify innovative financing structures which may support the project’s implementation through both public and private partners.  Those interested in learning more about this work or considering funding the project should contact Brittany Timmons at brittany.timmons@gmail.com.