Pay for Success Watch: Univ. of Utah Looks to Ramp Up Western PFS

The University of Utah’s Policy Innovation Lab in the James Lee Sorenson Global Impact Investing Center has announced the selection of six government agencies to participate in Pay for Success initiatives in Colorado, Utah, Idaho, Montana and Nevada.

Pay for Success financing (also known as Social Impact Bonds) are a form of performance based contracting in which the burden of social investment is shifted off the government and on to private investors. Private sector investors front the capital for organizations to implement social programs. The government only pays the initial investor back, with interest, if a specific set of outcomes are met. So, in essence, the government is now paying for outcomes and not services rendered.

The lab was created last year through a $1.15 million grant from the Social Innovation Fund (SIF), along with support from the Laura and John Arnold Foundation and the James Lee Sorenson Foundation.

The focus of the lab is to increase the number of PFS projects in the Western part of the United States. The lab intends to do this by providing capacity building and technical support to government grantees. The lab will also support service providers as they navigate the emerging funding model and prepare their organization to pursue a Pay For Success contract.

“Nonprofit service providers are the backbone of America’s social sector,” said Policy Innovation Lab Executive Director Jeremy Keele, in an interview with The Imprint. “We are committed to finding interventions that work and helping those providers demonstrate impact in order to attract investment.”

The lab’s award will be matched by an equal amount of in-kind and cash match funding from the University of Utah, external funders, and in-kind support from government sub-grantees and nonprofit sub grantees.

Government Grantees
Earlier this year, the lab held an open competition to identify municipal sub-grantees to develop and expand PFS projects in the West. The governments selected will receive between $75,000 – $150,000 and significant technical support to develop Pay for Success projects in the areas of chronic homelessness, early education, and recidivism.

According to Keele, one aspect of the lab’s approach is to create sustainability around PFS support. Included in the awarded grant dollars is the creation of a permanent staff position within the government to support the local work being done around PFS.

The newly created position would be supported by the lab in many ways, including trainings, research and resources and advising. This permanency differs from other national models, including the Harvard SIF lab which provides municipalities with short term Government Innovation Fellows to aid in the development and implementation of local projects.

Out of the six municipalities chosen, two are focused on youth-related projects: Adams County School District in the Denver Metro area of Colorado and the City of Las Vegas are addressing early education and school readiness.

See below for a full list of recipients.

Adams County School District 50, Colorado The Lab will assist Adams County School District 50 in assessing the feasibility of implementing a Pay for Success project to improve school readiness for kindergarteners in the district. Intervention models being explored are evidence-based programs like home visitation, parent support and high quality preschool.

City of Las Vegas, Nevada The Lab will assist the City of Las Vegas in assessing the feasibility of implementing a Pay for Success project in early education and school readiness. The City of Las Vegas seeks to increase access to high quality early childhood education programs, along with wrap-around services for at-risk youth in Southern Nevada.

The City of Las Vegas is working on the project with the State of Nevada, Clark County, and the Children’s Advocacy Alliance, a local non-profit. Measurable outcomes for proposed early childhood program include (1) increasing kindergarten readiness, (2) improving third-grade literacy, and (3) reducing the need for special education.

State of Colorado Department of Homeless Initiatives The Lab will assist the State of Colorado in exploring the feasibility of implementing a Pay for Success project to scale up an existing evidence-based criminal justice re-entry program called Colorado Second Chance Housing and Re-entry Program (C-SCHARP). C-SCHARP is aimed at reducing recidivism rates by providing supportive housing to dual diagnosed (substance abuse and mental illness) former offenders in the Denver metro area

City of Boise, Idaho The Lab will assist the City of Boise, Idaho, in assessing the feasibility of implementing a Pay for Success project focused on reducing chronic homelessness generally and recidivism among previously incarcerated individuals experiencing homelessness. The program recognizes that a high-quality intervention that couples supportive housing with wrap- around services has the potential to dramatically decrease chronic homelessness and recidivism among the chronically homeless population.

Missoula County, Montana The Lab will work with Missoula County, Montana, to assess the feasibility of implementing a Pay for Success project aimed at alleviating factors contributing to jail overcrowding. Missoula County hopes to achieve a threshold decrease in recidivism for the target population. The project seeks to divert low risk and low need individuals from jail, while providing mental health and other supportive services to individuals at a high-risk of re-offending.

State of Utah, Governor’s Office of Management and Budget The Lab will assist the State of Utah Governor’s Office of Management and Budget in assessing the feasibility of implementing a Pay for Success approach to address recidivism by specifically targeting offenders with co-occurring substance abuse and mental illness disorders. The State of Utah has already implemented a Pay for Success project (in early education).

Service Provider Support
The second phase of the lab’s approach is to identify between six and eighteen nonprofit service providers who are working in the selected geographic regions on the selected social issue. The selected grantees will receive $50,000 – $250,000 of in-kind services and technical assistance. These services may include social impact analyses; development of data systems and evaluation metrics; evaluation design; support for scaling and project cash-flow analysis.

Part of the lab’s approach to supporting service providers includes an open training to all interested service providers in the various jurisdictions.

There will be five separate workshops in Idaho, Montana, Nevada, Utah and Colorado. The workshops will focus on strategy development, metrics, evaluation strategies, data evaluation and performance management in a PFS model.

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