Here's a brief history of Pay for Success in Pa. - Generocity Philly

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Mar. 1, 2016 12:32 pm

Here’s a brief history of Pay for Success in Pa.

Also known as social impact bonds, Pay for Success is gaining traction nationally. Despite funding and legislation, Pennsylvania has yet to launch a project.

The capitol.

(Photo by Flickr user Jim Bowen, used under a Creative Commons license)

Editor's note: At 3:56 p.m. on Tuesday, March 1, the June 2015 feasibility study was added to the Pay for Success timeline.
Nothing drives a political wedge through the core of the American public quite like the partisanship of presidential elections.

Yet, as a recent piece in Time points out, government officials across party lines are simultaneously embracing Pay for Success — or, social impact bonds — as a possibly viable solution for solving some of the public sector’s most wicked problems.

Here’s how it works in a nutshell: Investors fund proven models for tackling problems like homelessness or addiction, then get their returns from government coffers once specific benchmarks are met.

As it stands, 11 Pay for Success projects are currently live in the U.S. And though no projects have been launched in Pennsylvania as of yet, it doesn’t mean the state hasn’t been trying. Here’s a timeline of activity surrounding the Pay for Success pursuit in Pennsylvania.

  • July 10, 2014. The City of Philadelphia releases a Request for Proposal (RFP) to conduct a feasibility study examining Pay for Success, specifically surrounding projects aimed at reducing recidivism rates and the number of system-involved youth.
  • Jan. 8, 2015State Rep. Todd Stephens (R-Montgomery) pens an op-ed for the Inquirer detailing the benefits of the Pay for Success model and states his intentions to introduce legislation that will push a program expanding early childhood education.
  • March 11, 2015. The state was awarded assistance from the Harvard Kennedy School‘s Social Impact Bond Lab and received a full-time “Government Innovation Fellow” for one year, pro bono technical advising, six months of programming and data analysis and a “small pool of flexible funding” for implementation.
  • March 16, 2015. Governor Tom Wolf releases his proposed budget for FY 2015-2016, which includes proposed legislation that would enable the state to enter into Pay for Success contracts in five priority areas: early childhood education, workforce development, public safety, health and human services and community-based services.
  • March 25, 2015. The state releases a Request for Information on Pay for Success opportunities — where they’ve been successful, how they’ve been implemented, what speedbumps the state should keep an eye out for and what kind of partnership opportunities might be available.
  • May 21, 2015. State Rep. Mike Schlossberg (D-Lehigh) introduces HB 1147, legislation designed to help the state pay for Pay for Success.
  • June 2015. Philadelphia releases it’s Pay for Success feasibility study, Roadmap for Pay for Success in Philadelphia. The report concluded that the city’s best chance at launching a successful recidivism reduction project would be in creating transitional employment opportunities — and considering the state’s shared interest, it would likely have to include the state as a partner.
  • Aug. 18, 2015The state issues a RFP from contractors willing to design and implement Pay for Success programs that will either reduce recidivism, promote public health or expanding access to high-quality early childhood education.

That just about sums it up. So, all in all, lots of loose ends and no real action. The launch of a project will take a government willing to back a private sector operation and investors ready to lose a large sum of money if the government doesn’t get its desired results.

From our Partners

It’s scary because it’s so new.

Pay for Success is very much unexplored territory for governments and the private sector alike —  the first project was only launched in the U.K. on March 18, 2010, with an American counterpart launching in New York City two years later in February of 2012.

The real hold up might have something to do with the partisanship blocking an actual state budget.

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