Urban Wire Five things to know about pay for success legislation
Justin Milner, Ben Holston, Rebecca TeKolste
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Interest in pay for success (PFS) continues to grow at the federal level. This week alone, the Senate Finance Committee held a related hearing on evidence-based practices, and the House Ways and Means Committee considered the Social Impact Partnership to Pay for Results Act (SIPPRA). This legislation would give state and local governments the opportunity to apply for funding to support evidence-based programs through outcomes-driven “social impact partnerships” like PFS.

As part of Urban’s Pay for Success Initiative, a project aimed at providing objective tools and technical assistance on PFS, we want to explain what would change for PFS under the legislation:

  1. SIPPRA would be the federal government’s largest investment in PFS. 
    The bill allows for up to $100 million in funding for PFS projects beginning in FY 2017, with much of that money funding on-the-ground projects. SIPPRA could help states address a major issue to scaling PFS: the wrong pockets problem, where one government entity bears the cost of a program while other entities share benefits without contributing any funding. The bill would provide a backstop to PFS projects and compensate state and local governments for savings that accrue to federal coffers.
  2. SIPPRA would allow support for projects targeting a wide range of outcomes. 
    SIPPRA projects could aim to reduce unemployment, child welfare involvement, preventable health issues, and homelessness, and improve high school graduation rates, birth outcomes, and early childhood development.

    The legislation also allows support for programs that produce “other measurable outcomes defined by the State or local government that result in positive social outcomes and Federal savings,” giving state and local governments the freedom to fund interventions that make the most sense for them.
  3. SIPPRA would require strong existing evidence in PFS projects. 
    Building on other recent legislation, the bill would require that projects demonstrate rigorous evidence of their ability to achieve their stated goals based on past experimental or quasi-experimental evaluations. While this narrows the scope of programs that state and local governments are likely to pursue, it places emphasis on vetted programs that have delivered in the past—a point we have written about extensively.
  4. SIPPRA would mandate rigorous evaluation. 
    SIPPRA would require that projects be evaluated with a randomized control trial (RCT) or a high-quality quasi-experimental design if an RCT is untenable. Such rigorous evaluations help build the evidence base for programs that work (and those that don’t).
  5. SIPPRA would generate PFS infrastructure at the federal level. 
    SIPPRA would create two supporting bodies: the Federal Interagency Council on Social Impact Partnerships and the Commission on Social Impact Partnerships. The council, composed of appointees from several federal agencies, would be responsible for reviewing applications and determining which projects receive federal funding. The commission would conduct research for the council and provide any other assistance needed to select the strongest projects and build up PFS at the federal level.

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