Exploring Pay For Success in K-12 Career and Technical Education: Observations From Six Sites Across the Nation

This blog post represents the views of Social Finance and JFF based on their collaboration with six local career and technical education sites around the country.

At the start of 2020, more than one in 10 young people between the ages of 16 and 24 were neither working nor in school. By June 2020, amid the economic fallout of the COVID-19 pandemic, that share had more than doubled to nearly three in 10, representing more than 10 million American youth.

As young people confront a challenging and uncertain economic future, career and technical education (CTE) is a path that can offer a crucial lifeline.

Across the country, more than 7 million middle and high school students participate in CTE annually. At their best, CTE programs prepare students for college and careers in high-demand, living-wage professions. Evidence shows that CTE students are more likely to graduate from high school, enroll in college, and earn more than students who do not focus on CTE. However, many school districts struggle to create high-quality CTE pathways. They often lack the significant resources required to develop rigorous courses that meet education and industry standards. They also face challenges building crucial partnerships with colleges and employers that could provide early college and work-based learning opportunities to CTE students. Obstacles are especially acute for school districts serving students from low-income backgrounds and student bodies that are racially and ethnically diverse.

To meet these challenges, in October 2016, the Office of Career, Technical, and Adult Education (OCTAE) at the U.S. Department of Education awarded a five-year, $2 million grant to Social Finance and Jobs for the Future (JFF) to expand high-quality CTE opportunities for youth who are underrepresented in these programs, through Pay for Success (PFS) financing. The grant enabled Social Finance and JFF to offer technical assistance to six local CTE sites across the country as they worked toward specific goals:

1. Mahoning Valley Educational Services Center: Expanding career academies (small schools within schools) to serve more students in Northeast Ohio.
2. NAF (formerly the National Academy Foundation): Expanding a program focused on work-based learning and paid internships in Dallas, Texas.
3. Pharr-San Jan-Alamo Independent School District: Expanding agricultural career pathways in the Rio Grande Valley in Texas.
4. South Bay Community Services in San Diego: Launching and scaling a career pathways program for opportunity youth in San Diego County, California.
5. Education Service Center, Region 19: Expanding biomedical CTE programming with three partner school districts in El Paso, Texas.
6.  The School District of Palm Beach County: Launching and scaling an advanced manufacturing CTE program for youth and young adults in Palm Beach County, Florida.

OCTAE initially envisioned that the technical assistance provided through the grant would culminate in fully structured PFS contracts. While this end goal has yet to be fulfilled as of this writing, the six sites have taken significant strides toward expanding CTE programming and improving outcomes for students.

Among the many successes achieved through this grant, Social Finance and JFF helped sites leverage research and data to clarify student and employer needs, identify strategic CTE pathways for potential expansion, and understand what it takes to build high-quality CTE programs. For example, each project resulted in research-based cost-benefit analyses illustrating the enduring benefits high-quality CTE programs could generate for students, employers, education systems, and governments. As benefits crystallized, participating stakeholders forged new partnerships and aligned on shared goals that emerged as part of the PFS process.

As we evaluate what we’ve learned over the past few years, four lessons stand out for future PFS efforts to support K-12 CTE programming. These lessons, which build on takeaways we documented in 2017 and 2019, illustrate conditions that should be addressed in future endeavors to strengthen CTE programs through this promising approach.

What We Learned

1. Expand the range of possible payors to open doors for additional investment.

Public education is traditionally funded through per-pupil formulas rather than outcomes achieved. And CTE’s most attractive outcomes (e.g., gainful employment and wages) can take years to accrue and are widely dispersed across students, employers, and government entities. This forms a wrong-pockets problem in which entities such as school districts may incur costs for programs without reaping the benefits that result. Given these challenges, we looked beyond traditional payors and sought to better leverage available funds. For instance, we identified opportunities to braid philanthropy with public funding and redirect existing funds to high-quality CTE programming. To attract a broader array of payors, we also focused on interim outcome measures, such as CTE pathway completion and credential attainment, to shorten the time required to achieve target outcomes.

2. Sustain support for PFS in public education.

PFS arrangements often involve multiyear timelines that can exceed the typically brief tenures of school district leaders serving predominantly Black and Latinx young people and students experiencing poverty. We attempted to secure a sustained commitment to PFS across an array of stakeholders, including superintendents, trusted third parties, and workforce development organizations. Yet we found that school systems often required more leadership continuity and capacity to attract funding and launch PFS programs.

3. Prioritize equity.

Partners should ensure that expanded CTE programs boost access to both college and career opportunities equitably within schools and districts targeted for expansion. For instance, at multiple sites, we recommended that program budgets include funding for transportation and other wraparound services to ensure that eligible students would not be excluded from work-based learning opportunities based on where they lived or attended school.

4. Embrace PFS as a journey.

It can be tempting to view PFS as an approach that succeeds only when transactions tie payments to outcomes. An evolving suite of PFS tools and our experience with CTE point to the need for a more nuanced view. At each site, we found cross-sector partners interested in building and growing CTE programs to benefit students—a critical condition for launching PFS in CTE. In assessing whether PFS was feasible at six sites across the country, we embarked with partners on a learning journey that strengthened programmatic goals, harnessed data to fine-tune assumptions about labor supply and demand, and united uncommon partners in new and creative ways.

We hope that the lessons we have learned will help chart a path for PFS in K-12 education. We are immensely grateful to OCTAE, participating sites, and our other partners on this five-year project.

For more information about Social Finance’s work throughout the OCTAE PFS program, please contact Kyle Doran or Matthew La Rocque.