BCG Assessment of Pathways to Education

Executive Summary

February 2011
Overview: Pathways-Boston Consulting Group partnership

Pathways approaching its 10th anniversary of improving high school graduation in 'at-risk' neighborhoods
• Initial cohort began in 2001 at first generation site (Regent Park) with first graduates in '04/'05
• New sites added in 2007, 2009 and 2010 to expand the program's reach, impact

BCG and Pathways To Education have enjoyed a collaborative partnership over last number of years
• Our focus has been assessing and validating the program's impact

Initial pro-bono effort conducted in '06-'07 to evaluate the social return of investment in Pathways
• Confirmed importance of addressing high school drop-out challenge to break the poverty cycle
• Assessed long-term societal value creation: $50K NPV, >9% IRR, 24X aggregate return on Pathways investment
– Based on early results for first 2 graduating classes

In 2010-11, BCG invited to reprise and broaden the Pathways program value assessment
• Refresh previous social return on investment value assessment
– integrate longitudinal information from generation 1 site to integrate subsequent classes
– increase confidence in societal impact levers
• Confirm portability of program to 2nd generation sites
– Define success flight path based on predictive metrics
– Prove subsequent sites
• Scope magnitude of need for Pathways-like investments throughout Canada

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Findings from the previous 2006-07 BCG assessment

Both school and non-school factors contribute to high-school dropout, e.g.,

• Non-school factors; low social class, minority status, school-home link, community support
• School factors; ineffective discipline, lack of counseling / support / outreach, disregard for learning
style

Comprehensive, community-based programs needed to support youth education

• Programs must include academic, advocacy, mentoring and financial support
• "Key risk factors are present in the community and, as a consequence... protective factors are
created in communities" − Hawkins et al (2000)1

Early results: Pathways to Education is elevating high school outcomes in Regent Park
• Dramatically decreasing dropout rate, increasing post secondary enrolment for early cohorts
• Decreasing violent and property crimes despite increases in neighbouring divisions
• Tackling integration of new immigrants in community with 80% visible minorities; 60% immigrants

Program expected to deliver substantial economic value to government and society

• ~24.5X payback on each charitable dollar invested in Pathways
• ~$50K return per student when adjusted for time value of money; 9.4% internal rate of return

1. Preventing Adolescent Health-Risk Behaviors by Strengthening Protection During Childhood, Hawkins et al., 2000
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 Executive summary
2010-11 findings consistent with previous results

The Pathways program...

High-school graduation essential to breaking the cycle of poverty in Canada
...delivers results • Drop-outs: 2X unemployment, lower earnings; 3x more likely from low-income families
... is addressing a
substantial need >70k high school students live in educationally at-risk communities that could justify
Pathways-like program based on return economics

... creates value Pathways program consistently reduces drop-out rate by ~70%
... delivers results Additionally, program improves post-secondary enrolment by 3X
• Program grads enroll in university 10% more than the national average

Program delivers 24X payback on every charitable dollar invested

• $600K cumulative benefit per student enrolled
• $45-50K NPV / student when adjusted for time value of money; 10% IRR
... creates value
Program also yields benefits to society aligned to government priorities
... is portable • e.g., Life expectancy and health outcomes better for high school graduates: lower
incidence of hypertension, cardiovascular disease, diabetes, smoking-related diseases

All generation 2 cohorts are on track to meet or exceed Generation 1 site performance
... is portable • Credit accumulation, attendance best in-process predictors of graduation outcome
... has room to grow
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 Context for action
High-school graduation essential to breaking the cycle of poverty in Canada

Youth from low income families High-school dropouts >2X more ...driving a growing earnings gap
are 3X more likely to dropout likely to face unemployment... between grads and non-grads

High-school dropout rate by average Canadian unemployment rates by Expected annual employment earnings by
community income1 educational attainment2 educational attainment3
Dropout Rate (%) Unemployment rate (%) Earnings ($K)
35% 20 80
University
Grad
30%
HS Dropout
15 60
25%

20% College
Grad
10 40
HS Grad
15%
HS Grad
College
Grad
10%
5 University 20 HS Dropout
Grad
5%

0% 0 0
Low 2 3 4 5 6 7 8 9 High 1995 2000 2005 2010 1995 2000 2005 2010
Community income decile

1. TDSB. Grade 9 Cohort of Fall 2000. 2. Statistics Canada. Labour force survey estimates by educational attainment, CANSIM database. 3. Statistics Canada, BCG analysis.
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 Pathways has delivered consistent drop-out reduction

% reduction in dropout rate (vs. site baseline performance)

80
71 74
68 68 70

60

40

20

0
Cohort 1 Cohort 2 Cohort 3 Cohort 41 Average
(2001)2 (2002) (2003) (2004) To Date
In-process

In Regent Park site, drop-out reduction has driven 2x increase

in likelihood of student graduation (based on 700 students)

1. 5 years of data available for cohort 4 at time of analysis; 16% of students still in school
2. Date cohort entered Grade 9 Note: Dropout rate reduction computed from baseline Regent Park dropout rate of 58%
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A note on the definition of high school 'drop-out'

Multiple definitions exist for key educational outcomes

• Drop-out rates: Assess if students remain in school, can vary based on timing of analysis
• Graduation rates: Measure proportion of students who graduate from high school – not
always the complement of drop-out if some students 'still in school' during analysis
• Attainment rates: Demographic measure for a jurisdiction; evaluate portion of population
achieving an educational accreditation which may or may not include high school

Definitional differences can drive 10-30 pt variance in the reported results

Pathways' view a targeted measure of drop-out / graduation outcomes

• Assembled with student-specific data provided by partner schools and school boards
• Focused on understanding end-state impact of Pathways program
• Definition: Students who have not graduated by end of 6th year following grade 9 enrolment

Measure provides an end-state view of performance

• i.e., no students 'still in school' when metric assessed
• Means that drop-out rate provides a direct complement to graduation

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Back-up: Pathways performance vs. common metrics

Pathways outcome
High-school "dropout" definitions Reported values comparables

End-state dropouts: Students who have not graduated by • TDSB1: 19-25% 18%
end of 6th year following grade 9 enrolment • Regent Park baseline: • Exceeding city average
Pathways • End-state metric; a direct complement to graduation 58% • ~70% improvement over
• Assembled from data on specific students provided by baseline
school boards to track outcomes

Dropouts: students not attending school 5 years after • TDSB1: 17-23% 14%
enrolling in grade 9 • Better than city average
TDSB • Metric is not a complement to graduation because
portion of students 'still in school'

• Ontario2: 21-29% 29%:

ON Min. of Non-completes: sum of declared dropouts and active • TDSB1: 24-31% • Meeting provincial and city
Education students after 5 years average ranges

No attainment: Population in a given age range (i.e., 20- • Ontario: 8% N/A

Stats Can 24 yr olds) with no certificate, diploma or degree • Canada: 9% • Not a relevant comparison
(Census) • Accreditations not requiring HS completion leads to • Regent Park baseline: • Metric not specific to high
under-estimation of dropout rate 23% school graduation

1. 2010 TDSB reports based on cohorts starting from 2000-2004, written by Rob Brown. 2. Ontario's Ministry of Education backgrounder on dropout rates (2010) Note: '07 BCG analysis
reference TDSB drop out metric due to data availability at time
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Pathways also elevating post-secondary performance
Enrolment results exceeding population averages

Post-secondary enrolment Post-secondary Mix

% of total HS students % of post-secondary attendees

100 >75% of 100
3.0X
Pathways College/
80 graduates 41
51 Trades
60 62
60
50
40
20 59 University
49
20

0 0
Pre-Pathways Ontario1 Pathways National Pathways
Average students Average2 Graduates3

Pathways dramatically improves enrolment in Pathways students more likely to choose

PS education university over college / trades
• >3X improvement over pre-Pathways baseline • Pathways grads enroll in University 10% more
• Pathways students now attaining provincial than the national average
averages

1. Queen's University Faculty of Education cohort study 2. Culture, Tourism and the Centre for Education Statistics Canada 3. Data from Regent Park Cohorts 1 through 4
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Outcomes driving several quantifiable benefits
2010 value proof uses similar approach as 2007; includes additional program data, updated sources

Increased Increased
Employment and Government Tax
Average Income Revenue

Decreased
Government
High-School
Improved Health Spending
Grad Rate
Statistics
Improvement
Quantifiable
f Benefits to = Total Benefits
Society
Post-Secondary Decreased
Enrolment Crime $600K in cumulative benefits per
Non-Quantifiable
Improvement
Benefits to Society student enrolled; $60-90MM per cohort
24X SROI per charitable dollar
Program Second Generation
invested in Pathways
Costs Benefits

Pathways has a full financial payback to society of

>10% annually on all costs

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Benefits of educational attainment far exceed program costs

Increased Higher expected employment income, disposable income

government tax • Higher income taxes collected
revenue • Higher sales taxes generated with increased consumer spending

Decreased Reduced government transfer payments, social assistance due to reduced need
government Lower propensity to commit crimes
spending • Savings for the justice system and prisons with lower likelihood of incarceration

Better health opportunities; greater access to and investment in personal health

Quantifiable Increased general health outcomes, increased life expectancy
benefits to society • More preventative health care, less risk taking behaviour
• Reduced incidence of smoking, diabetes, hypertension, heart disease
Higher economic growth rates due to better educated and more productive labour force
Non-quantifiable Increased civic engagement
benefits to society • Increased time spent volunteering; higher likely hood to donate to charity
• Better integration of new immigrants; tackling 1st generation education challenges

Second Reduced societal burden from children with better educated parents:
generation • Lower child benefit payments due to less need and fewer children
benefits • Children with better educational attainment who produce similar benefits to society

Program Pathways costs: $5k per year per student including program supports, infrastructure, scholarship
Costs Schooling costs: Incremental provincial costs associated with keeping students in school longer

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Societal return on investment significantly NPV positive
Pathways driving >$45K per student enrolled

NPV of societal impact of a student enrolled in Pathways to Education

$K per student
60

Internal rate of return on investment 14 46+

in Pathways Program = 10.1%
40
3 0.4
6
12 Child Benefits = 4
20 2nd Gen = 10

0
National Office
Student Scholarship
Site Costs
-20
-19 31
-7 6

-40
Cost of Costs of Reduced Federal Provincial Sales tax Justice Health Second Total
Pathways schooling transfer income tax income tax Generation
program payments Impact

Note: 45 year time horizon (up to age 59)

Sources: Pathways Regent Park student performance data, Toronto District School Board, Ontario student assistance program, Statistics Canada income and educational data, Provincial and
Federal government publications, BCG Analysis
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Value assessment refresh based on Gen 1 site experience
Generation 2 sites expected to begin producing graduates in 2011

Cohort 1 (2001)
Cohort 2 (2002)
Cohort 3 (2003)
Cohort 4 (2004)
Gen 1: Cohort 5 (2005)
Regent Cohort 6 (2006)
Park Cohort 7 (2007
Cohort 8 (2008)
Cohort 9 (2009)
Cohort 10 (2010)

Cohort 1 (2007)
Gen 2: Cohort 2 (2008)
5 sites1 Cohort 3 (2009)
Cohort 4 (2010)

Gen 3: Cohort 1 (2009) Cohorts with end-state graduation rate

2 sites2 Cohort 2 (2010) Cohorts with some HS grads
Cohorts without HS grads
Gen 4: Cohort 1 (2010)
3 sites3
0 2 4 6 8 10
Maturity of program (years)
1. Lawrence Heights, Rexdale, Kitchener, Ottawa, Verdun (Montreal), note Verdun on longer time-line to graduation due to Quebec school system
2. Scarborough, Hamilton
3. Halifax, Winnipeg, Kingston
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However, early results show Pathways program portable (I)

Regent Park cohorts have followed Two predictive metrics of program

common trajectory outcome success identified

Average total credits accumulated Credit accumulation: Best predictor of

30 5% 5% 5% graduation
5% • Credits attained early have greater impact
25 than credits attained later
5% – improves likelihood to graduate
20 – increases chances of PS enrolment
7%
• All sites outperforming Regent Park trajectory
15 Note: Early credit – higher yearly avg credit accumulation
accumulation is most – tighter outcome distribution across all sites
8% critical
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Absenteeism: Correlated to credit
0 accumulation
Year 1 Year 2 Year 3 Year 4 Year 5 Year 6 Year 7 • Attendance in early years drives credit
Program (year end) accumulation
– poor attendees expected to earn 3 fewer
Cohort 1 Cohort 3 Cohort 5
credits per year than strong attendees1
Cohort 2 Cohort 4

x% Increase in likelihood to graduate per credit accumulated in year

1. Strong attendees represent students with <5% absenteeism. Poor attendees represent students with >15% absenteeism
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Pathways program is portable (II)
All generation 2 cohorts on track to meet, exceed Regent Park performance

Average credit accumulation at generation two sites

Average credit accumulation, year one Average credit accumulation, year two
7.5 14.0

7.0 13.5

6.5 13.0

6.0 12.5
0.0 0.0
Ottawa Lawrence Rexdale Kitchener Ottawa Lawrence Rexdale Kitchener
Heights Heights
Observed range at Regent Park
Average performance observed at Regent Park
Observed performance range at gen 2 sites
Note: Quebec site excluded from analysis due to different credit structure and timeframe (i.e., initial years in Quebec cover different grades than Ontario-based sits)
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 Beyond current sites, substantial need remains nationally

Screened population ... ... based on 2 criteria... ...to understand magnitude of challenge

>70k students living in 'educationally at

risk" communities with:
• High unemployment
Education: • Low-income families
• Census: no degree, diploma • Low educational attainment
Canada-wide census or certificate by age 24
data screened • 25% above Canadian avg.1 Traits of these communities similar to
• Focused on urban current Pathways sites suggesting
centers Economic: investment returns could hold
• Low Income Cut-Off
• 2X Canadian avg.2 ~70% of the 125 identified 'at risk'
communities in current Pathways
geographies
• 35 in Montreal
• 27 in Toronto
• 11 in Winnipeg
• 8 in Ottawa
• 4 in Hamilton

1. StatsCan "dropout' definition: no educational attainment: no diploma, degree or certificate completed (20-24 year olds): 'educationally at risk' threshold =17% of community with "no attainment"
2. Low Income Cut-Off (LICO): income level requiring individuals to spend 20% more of income on necessities than the average: 'educationally at risk' threshold =25% of community below LICO

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