Pay For Success Watch: Salt Lake City Looking For Another Pay For Success Project

The Salt Lake County Council has approved Mayor Ben McAdams’ request to advance $150,000 from next year’s regional-development budget to begin the initial phases of another Pay for Success (PFS) project. The PFS allocation is part of a $1.1 billion county budget that was proposed this month.

The budget allocation will be used to hire a consultant, Third Sector Capital Partners. Third Sector is a leading organization contributing to the acceleration of PFS and social innovation projects nationwide. The advisory firm will be conducting initial assessments to help the county identify a subject area where the PFS model could yield long term savings

PFS projects shift the burden of social investment off the government and onto 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 county first introduced this public-private partnership model in 2013 for an early education initiative.

Utah’s first PFS project has expanded the Granite and Park City District’s preschool program. Prior to the PFS project, the district’s preschool was serving 3,000 county children. The investment allows 600 additional low-income children in central Salt Lake County to receive high-impact early education services.

The overall success of this project will be determined by participant’s usage of special education services in elementary school. Children participating in the high-impact preschool will take a predicative evaluation of their likeliness to need special education services. Those children will be tracked from termination of preschool to sixth grade. Every year that a student does not need special education or remedial services will result in a pay-for-success payment.

The project’s investors are Goldman Sachs and the J.B. and M.K. Pritzker Family Foundation. United Way of Salt Lake is the project’s intermediary organization, overseeing the daily operations of the preschool expansion. United Way is also responsible for repayments to the private investors.

The Chronicle will be following the developments in Salt Lake County as the current project begins an analysis phase.

Judith Fenlon is the money and business editor for The Imprint.

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