Bill Text: CA SB593 | 2013-2014 | Regular Session | Enrolled
Bill Title: Social impact partnerships: pilot program.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Vetoed) 2014-09-29 - In Senate. Consideration of Governor's veto pending. [SB593 Detail]
Download: California-2013-SB593-Enrolled.html
BILL NUMBER: SB 593 ENROLLED
BILL TEXT
PASSED THE SENATE AUGUST 28, 2014
PASSED THE ASSEMBLY AUGUST 26, 2014
AMENDED IN ASSEMBLY AUGUST 22, 2014
AMENDED IN ASSEMBLY AUGUST 18, 2014
AMENDED IN ASSEMBLY JULY 2, 2014
AMENDED IN ASSEMBLY JUNE 10, 2014
AMENDED IN SENATE JANUARY 27, 2014
AMENDED IN SENATE JANUARY 6, 2014
AMENDED IN SENATE APRIL 23, 2013
INTRODUCED BY Senator Lieu
FEBRUARY 22, 2013
An act to add and repeal Title 15.5 (commencing with Section
97000) of the Government Code, relating to social impact
partnerships.
LEGISLATIVE COUNSEL'S DIGEST
SB 593, Lieu. Social impact partnerships: pilot program.
Existing law establishes the Office of Planning and Research in
the Governor's office and sets forth its powers and duties as the
comprehensive state planning agency, including, among other things,
to evaluate plans and programs of departments and agencies of state
government.
This bill would state findings and declarations of the
Legislature regarding the social problems currently facing the state
and the function of social innovation financing, pay-for-success
contracts, and social impact partnerships. The bill would authorize
the Governor, or his or her designee, to solicit proposals for social
impact partnerships using pay-for-success contracting and to enter
into social impact partnerships, as defined, to address policies or
programs not currently funded by the state, to address a particular
component of a state program in order to improve outcomes or lower
state costs, to reduce recidivism, to reduce child abuse and neglect,
or to assist at-risk and foster children, provided that the social
impact partnership does not cause the displacement of any state
employee and the contractual agreement contains specified provisions.
The bill would require a pay-for-success contract for a social
impact partnership to be submitted to the Legislature as part of the
Governor's proposed budget, and any funding necessary for that fiscal
year to be included in the Governor's proposed budget for the state
agency that would administer or oversee the contract. The bill would
require the Treasurer to separately account for moneys approved by
the Legislature and the Governor to use for payment for these
contracts, upon appropriation by the Legislature.
This bill would repeal these provisions on January 1, 2020.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all of the
following:
(a) Over six million people are currently living in poverty in
California, and 22 percent are children. One in five children in
California lives in poverty and nearly one-half of children in
California either live in poverty or perilously close to it.
(b) The recidivism rates in California are among the highest in
the nation. According to a 2012 report by the Department of
Corrections and Rehabilitation, just over 65 percent of those
released from California's prison system return within three years.
(c) Approximately 55,000 children are in the foster care system in
California, yet, according to the Pew Charitable Trusts, by 19 years
of age only 57 percent of emancipated foster youth have received
high school diplomas or general education development (GED). Over 70
percent of all state prison inmates have spent time in the foster
care system.
(d) Despite current efforts to address these challenges, there are
simply not sufficient resources available through traditional
funding mechanisms. Innovative approaches that can be shown to
achieve defined goals should be pursued.
(e) Research and experience at the federal level and in other
states show that the public can benefit from the use of social
innovation financing to establish partnerships between governmental
agencies, private investors, and service providers using
pay-for-success contracts to achieve measurable social benefits.
(f) Social innovation financing and the use of pay-for-success
contracting can be an especially effective tool for addressing social
and community development challenges where private sector
innovations are needed and multiple approaches are appropriate.
(g) This act will authorize the state to contract with
nongovernmental organizations to provide a service to a targeted
population over a specified period of time. If the results of the
services provided meet predetermined program goals, the state will
repay the nongovernmental organization for the services rendered plus
an agreed upon rate of return. If the social program does not meet
the targets, the government pays nothing.
(h) This act will authorize the state to enter into
pay-for-success contracts to meet state goals to reduce recidivism
and improve outcomes in the child welfare system. These contracts are
in addition to any contract entered into in connection with the
Social Innovation Financing Program authorized by Title 15.8
(commencing with Section 97008) of the Government Code.
(i) The social impact partnership model was first used in the
United Kingdom in 2010 and has since been adopted in New York. Twelve
other states are developing social impact partnerships, including
Illinois, Michigan, New Jersey, Ohio, and Washington.
(j) In a time of limited public funds and a decrease in
philanthropy, the social impact partnership model is being used
across the nation to address social problems, to reduce recidivism,
to reduce chronic homelessness, and to fund early childhood
intervention and prevention services and job training programs.
SEC. 2. Title 15.5 (commencing with Section 97000) is added to the
Government Code, to read:
TITLE 15.5. SOCIAL IMPACT PARTNERSHIPS PILOT PROGRAM
CHAPTER 1. GENERAL
97000. This title shall be known, and may be cited, as the Social
Impact Partnerships Pilot Program.
97000.5. (a) For purposes of this title, the following
definitions shall apply:
(1) "Pay-for-success contract" means a type of contract that the
state may enter into with a service provider that sets performance
and quality standards that must be met in order for the service
provider to be paid. Pay-for-success contracts are often used to
address a defined demographic group's particular needs for which
payment will be made after predetermined measurable results have been
achieved.
(2) "Social impact partnership" means a contractual relationship
between a public entity and one or more private entities for the
purpose of addressing a social, economic, or educational challenge.
The context, authorities, and responsibilities of a social impact
partnership are laid out in a pay-for-success contract.
(3) "Social innovation financing" means an investment arrangement
using private funding to finance a social program administered by a
nonprofit organization or a for-profit service provider on behalf of
a government agency pursuant to a pay-for-success contract, social
innovation bond, or other model that results in the state paying for
performance.
(b) Pay-for-success contracts, excluding those contracts entered
into pursuant to Title 15.8 (commencing with Section 97008), may be
entered into, subject to the conditions and requirements of this
title, for any of the following:
(1) To address policies or programs that may be appropriate to
meet a defined demographic group's particular need, but that are not
currently funded by the state.
(2) To address a particular component of a state program in order
to improve outcomes or lower state costs.
(3) To improve outcomes in a program designed to reduce recidivism
in the population of formerly incarcerated individuals.
(4) To reduce the incidence of child abuse and neglect through
prevention and treatment, to improve the stability of at-risk and
foster children through behavioral health and other trauma-informed
care.
(c) A social impact partnership entered into pursuant to this
title shall not be used in lieu of funding or administering an
existing state program nor cause the displacement of any state
employee.
(d) The Governor, or his or her designee, may solicit proposals
for social impact partnerships using pay-for-success contracting
pursuant to Section 97001. At a minimum, each application for a
contract shall include all of the following:
(1) A description of the proposed social program.
(2) A description of the organization's experience in providing
the proposed social program.
(3) A description of the financial stability of the organization.
(4) An identification of each component of the social program to
be provided.
(5) A description of the manner in which the social program will
be provided.
(6) A description of the recruitment or selection process, or
both, for participants in the social program.
(7) The proposed quantifiable results upon which the success of
the program will be measured.
(8) An itemization of all expenses proposed to be reimbursed under
the contract.
(9) A description of how the final payments for successful
programmatic outcomes are structured in the contract.
(10) A description of all parties to the proposed contract,
including prospective investors and philanthropic foundations.
(e) The Governor, or his or her designee, is authorized to enter
into social impact partnerships, subject to the conditions and
requirements of this chapter, for the purposes set forth in
subdivision (b) if the pay-for-success contract contains all of the
following:
(1) A requirement that payments for services be conditioned upon
the achievement of specific outcomes based on defined baseline
metrics, performance measures, and quality standards.
(2) A requirement that an independent evaluator be used to
determine whether the performance outcomes and quality standards have
been achieved.
(3) Specifications for how success will be measured and payments
for services are earned.
(4) A calculation for the amount of, and the timing of, payments
that will be earned by the service provider during each year of the
agreement, if performance outcomes are achieved as determined by the
independent evaluator.
(5) If applicable, pursuant to paragraph (2) of subdivision (b), a
statement that the contract will result in significant performance
improvements or budgetary savings if the performance outcomes are
achieved.
(6) Safeguards to protect the well-being of the population being
served including, but not limited to, privacy, health, and safety.
(f) Before finalizing the terms and conditions of the
pay-for-success contract, the state agency that is assigned to
administer or oversee the pay-for-success contract authorized by this
title shall undertake an assessment to determine appropriate
baseline metrics, performance standards, and quality measures to be
included in the pay-for-success contract. At the conclusion of the
pay-for-success contract, the state agency shall provide the Joint
Legislative Budget Committee, the Senate Committee on Business,
Professions and Economic Development, and the Assembly Committee on
Jobs, Economic Development, and the Economy, with an assessment of
how effective the social impact partnership model was in meeting the
particular needs of the targeted demographic group and make
recommendations on how the structure or process of undertaking a
social impact partnership through pay-for-success contracts may be
improved.
97001. (a) A pay-for-success contract for a social impact
partnership shall be submitted to the Legislature as part of the
Governor's proposed budget, including any statutory changes that may
be necessary for the pay-for-success contract to move forward. Any
funding of the contract for that fiscal year shall be included in the
Governor's proposed budget for the state agency that would
administer or oversee the contract. A pay-for-success contract shall
not be entered into without funding approval by the Legislature. This
subdivision shall not apply to any contract entered into pursuant to
Title 15.8 (commencing with Section 97008).
(b) The Treasurer shall separately account for moneys within the
State Treasury for pay-for-success contracts that have been approved
by the Legislature and the Governor, and hold those moneys, until the
outcome of the social impact partnership has been evaluated,
pursuant to subdivision (g) of Section 97000.5, and the moneys
appropriated by the Legislature for payment of the pay-for-success
contract.
97002. (a) This title shall not apply to any contract entered
into pursuant to Title 15.8 (commencing with Section 97008).
(b) This title does not create a statutory entitlement to services
or any contractual obligation on the part of the state.
97003. This title shall be repealed on January 1, 2020.
