Forging a New Path: Using Pay for Success to Build Career Pathways for Underserved, High-Need Youth

By Anna Fogel, Social Finance

Well-paying jobs and career opportunities are harder and harder to find without a postsecondary degree or industry-recognized credential. Yet many young people, especially students of color and those from low-income families, lack access to educational opportunities that can prepare them for these jobs. In one study in Chicago, more than 40% of black males ages 20 to 24 were out of school and not working, compared to only 8.5% of white males. On the other side of the equation, employers are increasingly concerned by the limited number of young adults who are prepared to succeed in the workforce.

Communities are increasingly looking to high-quality career and technical education (CTE) to meet employers’ needs and improve economic opportunities for youth. Rigorous academic and technical programs can ensure that all students—including those that are low-income and youth of color—develop the skills and knowledge to succeed in college and career. Programs that coordinate with employers can ensure that there is a stronger pipeline of job-ready individuals, as well as employment opportunities waiting for youth when they graduate.

In recent years, many programs have focused on measuring what works for students and employers in their communities and are poised to scale. An innovative public-private partnership may be the right tool to do it. Pay for Success leverages private capital to scale social services that have strong evidence of improving outcomes. Entities that value those improved outcomes—often government, but also private organizations such as employers—agree to repay private funders if outcomes are achieved. A performance-based contract governs the project, and an independent evaluator measures the results.

Recognizing the exciting potential of scaling high-quality CTE programs using Pay for Success, Social Finance and Jobs for the Future (JFF) have partnered with sites to explore opportunities in their local communities. With $2 million in support from the U.S. Department of Education, JFF and Social Finance will provide technical assistance to help sites assess the potential of, and then develop, Pay for Success projects.

These sites—from across the country, serving diverse populations of underserved, high-need youth, and scaling varied types of CTE programs—will be the first in the country to explore Pay for Success financing in K-12 education.

• South Bay Community Services is leading a consortium of education and nonprofit partners to implement the Back on Track framework for youth in San Diego County, providing pathways to in-demand career industries, such as social services or medical support. Back on Track reengages youth who are off track from graduation and career opportunities, using enriched preparation, postsecondary bridging, and first-year supports to help them achieve their postsecondary ambitions.
   
• NAF will build on its 30-year history of partnering with high schools in high-need communities, focusing on increasing opportunities for full student participation in work-based learning and paid internships, through expanding their Future Ready Labs initiative in sites that may include Dallas, Miami-Dade, Minneapolis, or New York City. NAF brings together education, business, and community leaders in 36 states around the country to create small career academies within schools that incorporate work-based learning.
   
• Mahoning Valley Prepared for Success, led by the Mahoning County Educational Services Center, provides high-quality CTE programming, including dual enrollment in college, career pathways and linked learning, and first-year experience courses. Communities like Mahoning Valley are creating partnerships with Mahoning and Columbiana Training Association, the Youngstown/Warren Regional Chamber of Commerce, institutions of higher education, schools, and local government to ensure students are getting credentials that will prepare them for rewarding careers with employers in their communities.
   
• Pharr-San Juan-Alamo Independent School District, which provides CTE to students in the Rio Grande Valley—one of the poorest regions of the country—plans to grow opportunities for students to pursue food, agriculture, natural resources, and human sciences studies. The program will connect students directly to agriculture career pathways by working with the City of Pharr and local agricultural employers.

We are eager to see how Pay for Success can expand promising education programs like these, narrowing the opportunity gap and providing young people with the skills they need to thrive in an ever-evolving economy.