HB15-1317

HB15-1317 - Pay For Success Contracts

Passed/Signed into Law
Concerning Pay For Success Contracts.

Pay for success contracts leverage private sector resources to implement social services programs that are likely, but not guaranteed, to generate subsequent direct or indirect reductions in government spending for other programs. Under a pay for success contract program, a government enters into a pay for success contract with a lead contractor under which the lead contractor implements one or more desired programs, the government agrees to make payments to the lead contractor from resulting direct or indirect reductions in government spending if the lead contractor meets defined performance targets, and the lead contractor uses the payments to recoup its costs incurred in implementing the program or financing the implementation of the program. The government shifts the risk of a program being unsuccessful to the lead contractor because it only pays the lead contractor if the lead contractor meets defined performance targets and if sufficient direct or indirect reductions in government spending for other programs result from the implementation of the program.

The bill establishes the state pay for success contracts program for the purpose of authorizing the office of state planning and budgeting (OSPB) to enter into state pay for success contracts with one or more lead contractors for the provision of social services that will reduce the need for the state to provide other social services in the future.

A state pay for success contract must:

  • Clearly define the type, scope, and duration of the social services that the lead contractor will directly or indirectly provide, which it must provide by implementing a new program or expanding the population served by an existing program, or both, and the specific outcomes sought to be achieved based on defined performance targets;
  • Provide for an objective process by which an independent evaluator will determine whether the defined performance targets have been achieved;
  • Specify the procedures that the lead contractor must follow in order to request payments; and
  • Specify that the OSPB must approve any request for payment made by the lead contractor and that the obligation of the OSPB to make any payment is subject to annual appropriation by the general assembly.

With the approval of the OSPB and the lead contractor, one or more local governments may be additional parties to a pay for success contract to be entered into by the OSPB if the chief financial officer and the governing body of each participating local government review and approve the terms of the proposed contract. Any pay for success contract that includes one or more local governments as additional parties must provide for the allocation of payment responsibilities between the state and each local government if the lead contractor meets the defined performance targets specified in the contract.

The OSPB must enact a sustainability plan based on successful outcomes and performance at the end of a pilot period for those programs or services that yield savings as assessed by an independent evaluator. If requested by the OSPB or the state auditor, the independent evaluator must provide its assessment and the data underlying its assessment to the state auditor for review. The state, a lead contractor, or any other person involved in the provision of services being provided through a program that is implemented through a pay for success contract are not exempted from any federal or state law or rule that protects the confidentiality of or restricts the use of financial, health, or other personal information or records of individuals who apply for or are served by the program.

The pay for success contracts fund is created in the state treasury and consists of money transferred or appropriated by the general assembly from direct or indirect reductions in state spending resulting from the provision of social services under a pay for success contract or from any other source, any money received by the state from a local government that has joined a contract as an additional party for the purpose of making payments to a lead contractor, and fund investment earnings. Subject to annual appropriation by the general assembly, the OSPB may expend moneys in the fund for administrative costs and to make payments to the lead contractor as required by a pay for success contract.

Latest update: May 20, 2015
05/20/2015 Governor Signed
05/13/2015 Sent to the Governor
05/13/2015 Signed by the President of the Senate
05/12/2015 Signed by the Speaker of the House
05/04/2015 Senate Third Reading Passed - No Amendments
05/01/2015 Senate Second Reading Passed - No Amendments
04/29/2015 Senate Committee on State, Veterans, & Military Affairs Refer Unamended to Senate Committee of the Whole
04/20/2015 Introduced In Senate - Assigned to State, Veterans, & Military Affairs
04/20/2015 House Third Reading Passed - No Amendments
04/17/2015 House Second Reading Special Order - Passed with Amendments - Committee
04/17/2015 House Committee on Appropriations Refer Unamended to House Committee of the Whole
04/14/2015 House Committee on Business Affairs and Labor Refer Amended to Appropriations
03/27/2015 Introduced In House - Assigned to Business Affairs and Labor

3rd Reading Vote Summary - HB15-1317*

House Vote Summary - April 20, 2015
Yes No Excused Absent
52 11 2 0
Senate Vote Summary - May 4, 2015
Yes No Excused Absent
22 13 0 0
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