PRINTER'S NO. 1335

THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

No.

1136

Session of

2017

INTRODUCED BY STEPHENS, SCHLOSSBERG, MACKENZIE, TOPPER, MURT,

READSHAW, A. HARRIS, V. BROWN, D. COSTA, GABLER, NEILSON AND

GILLEN, APRIL 10, 2017

Chapter 1. Preliminary Provisions

Section 101. Short title.

Section 102. Definitions.

Chapter 3. Pay for Success Pilot Program

Section 301. Program established.

Section 302. Program description.

Section 303. Pay for success contracts.

Section 304. Intermediary activities.

Section 305. Duties of Independent Fiscal Office.

Chapter 5. Funding

Chapter 21. Miscellaneous Provisions

Section 2101. Effective date.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

CHAPTER 1

Section 101. Short title.

This act shall be known and may be cited as the Pay for

Success Authorization and Performance Accountability Act.

Section 102. Definitions.

(2) has earned a Keystone STAR 3 or Keystone STAR 4

designation; and

(3) has applied for participation in the pilot program

and is qualified to receive funds under a pay for success

contract.

"Fund." The Pay for Success Trust Fund established under

section 501.

"Independent evaluator." An individual or organization that

evaluates whether the predefined outcomes of a pay for success

contract have been achieved.

standards, raising capital to finance the delivery of social

services via a social impact funding instrument and

administering the social impact funding instrument by providing

ongoing investor relations and project management. The term

includes an affiliate of an intermediary.

"Office." The Office of the Budget.

"Pay for success contract." An outcome-based performance

agreement entered into by the Commonwealth with an intermediary

to achieve specifically defined, measurable outcomes for a given

population over a certain period of time for which the

capital for social programs.

CHAPTER 3

PAY FOR SUCCESS PILOT PROGRAM

Section 301. Program established.

(a) Establishment.--The Pay for Success Pilot Program is

established to expand access to high-quality early childhood

education services by encouraging private investment in early

childhood education. The pilot program is designed to reduce:

(1) Federal, State and municipal expenditures related to

early childhood education services.

Section 302. Program description.

The pilot program shall be comprised of three pilot projects.

One pilot project shall be implemented within each of the

following, as determined by the office:

(1) A county of the first or second class.

(2) A county of the second class A or third class.

(3) A county of the fourth through eighth class.

Section 303. Pay for success contracts.

Notwithstanding any other provision of law, the office may

enter into pay for success contracts for early childhood

(ii) To reduce the number of children requiring

special education services and grade retention by fourth

grade.

(2) A requirement that payment from the Commonwealth be

conditioned on the achievement of specific outcomes, based on

defined performance targets.

(3) An objective process by which an independent

evaluator will determine whether the performance targets have

been achieved.

(4) A detailed description of the intermediary's

determined by an independent evaluator.

(6) A requirement that the intermediary create a social

impact funding instrument to obtain the funds required for

the pilot program.

(7) A requirement that the total amount of repayments

and interest shall not surpass 50% of the actual total

savings to the Commonwealth, as determined by the Independent

Fiscal Office.

(8) A requirement that the intermediary provide to the

office an annual status report on all contracts. The report

program, the reason for rejection.

(iv) The number of persons served by the pilot

program.

(v) The type of services provided.

(vi) The outcomes observed.

(vii) The costs avoided.

(9) A funding provision, which requires that the office

request an appropriation to the fund each fiscal year that

the contract is in effect, in an amount determined by the

Independent Fiscal Office based upon an assessment of an

of the contract.

(10) A process for the Commonwealth to review payments

made by the intermediary through reporting requirements

pursuant to the contract.

(11) A determination by the Independent Fiscal Office

that the contract will result in significant performance

improvements and budgetary savings to the Commonwealth across

all impacted areas and agencies if the performance targets

are achieved.

Section 304. Intermediary activities.

to a pay for success contract.

(3) Deploying capital and providing guidance to eligible

organizations working toward achieving the defined outcomes

of a pay for success contract.

(4) Assisting an independent evaluator with the

evaluation process by which the outcomes of a pay for success

contract are determined.

(5) Repaying the providers of capital in the event the

defined outcomes are achieved and verified.

(6) Providing the Independent Fiscal Office with any

necessary to pay the principal and interest on all obligations

for repayment under the pay for success contracts entered into

by the Commonwealth.

CHAPTER 5

FUNDING

Section 501. Pay for Success Trust Fund.

(a) Establishment of fund.--The Pay for Success Trust Fund

is established as a special fund in the State Treasury. All

money deposited in the fund and the interest it accrues are

appropriated on a continuing basis to the office and shall be

payment for services provided during a given fiscal year under

the pay for success contracts entered into by the office. The

budget request shall only include payments to be made under pay

for success contracts when the performance targets are achieved

in accordance with the terms of the contracts. The Independent

Fiscal Office shall determine, based upon an assessment of an

independent evaluator, whether performance targets are

successfully achieved. The independent evaluator may not be

associated, as that term is used in 65 Pa.C.S. Ch. 11 (relating

to ethics standards and financial disclosure), with any investor

(e) Separate account.--The State Treasurer shall establish a

separate account within the fund for each pay for success

contract entered into by the Commonwealth.

Section 502. Grants and other funding.

The office and an intermediary may apply for, and accept for

deposit into the fund, gifts, donations and grants from

interested public or private sources for the establishment and

administration of the pilot program and the capitalization of

the fund.

Section 503. Limitation.

(a) Report required.--By February 1 of each year, the office

shall provide a status report on the pilot program to the

following:

(1) The Governor.

(2) The chairperson and minority chairperson of the

Appropriations Committee of the Senate.

(3) The chairperson and minority chairperson of the

Appropriations Committee of the House of Representatives.

(b) Contents.--The report shall include the following

information:

contract.

(4) The total anticipated repayment obligation for all

outstanding pay for success contracts, as determined by the

Independent Fiscal Office based upon an assessment of current

performance outcomes by an independent evaluator.

(5) An assessment of the feasibility of expanding the

pilot program Statewide and expanding the scope of pay for

success contracts beyond early childhood education programs.

(c) Public information.--The report shall be subject to the

act of February 14, 2008 (P.L.6, No.3), known as the Right-to-

Section 2101. Effective date.

This act shall take effect in 60 days.