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House of Representatives
Session of 2015 - 2016 Regular Session

MEMORANDUM

Posted:	May 6, 2015 03:28 PM
From:	Representative Michael H. Schlossberg
To:	All House members
Subject:	Pay for Success Legislation

Please join me in sponsoring a legislative proposal that would authorize partnerships between the Commonwealth, philanthropic and private sector investors to facilitate the use of private financing to pay for certain Commonwealth funded programs and services. This approach, commonly referred to as pay-for-success, has been implemented from as far away as the United Kingdom and Australia to as close as Maryland and New York. With the pay-for-success financing model, The Commonwealth would work with private investors who would provide upfront capital for service providers to deliver evidenced-based social services and other programs to targeted populations. I believe that the pay-for-success model will effectively identify the programs that work and those that do not, thereby, optimizing both the delivery of programs and services while reducing Commonwealth spending of taxpayer dollars. Under my proposal, the Office of the Budget, and other State agencies, would be given the authority to enter into pay-for-success contracts with intermediaries; the philanthropic and private sector investors. The intermediaries would be required to document their investment capital at the commencement and throughout the performance of the contract. The pay-for-success contract would specify the program or service to be provided; the population to be served, the methodology to be used to measure performance, the outcomes to be achieved, and the payment schedule. However, an investors’ return on investment would only be reimbursed when a rigorous evaluation process by a third-party evaluator shows that the programs or services delivered meet predefined performance targets and outcomes, as outlined in the pay-for-success contract. Programs and services that could be performed under a pay-for-success contract would include early childhood education, including pre-kindergarten; workforce development; public safety, including programs that reduce recidivism and juvenile justice; health and human services, including drug and alcohol addiction treatment; chronic homelessness; and long term care. I thank you in advance for joining me as a sponsor of this legislative proposal. However, if you have questions, please contact my Legislative Assistant Geoff Brace (gbrace@pahouse.net).

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