Bill Text: HI HB1402 | 2014 | Regular Session | Amended
Bill Title: Social Impact Bonds; Early Education
Spectrum: Partisan Bill (Democrat 11-0)
Status: (Engrossed - Dead) 2013-12-18 - Carried over to 2014 Regular Session. [HB1402 Detail]
Download: Hawaii-2014-HB1402-Amended.html
|
HOUSE OF REPRESENTATIVES |
H.B. NO. |
1402 |
|
TWENTY-SEVENTH LEGISLATURE, 2013 |
H.D. 2 |
|
|
STATE OF HAWAII |
|
|
|
|
|
|
|
|
||
|
|
||
A BILL FOR AN ACT
RELATING TO SOCIAL IMPACT BONDS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. The legislature finds that a new social and financial landscape and competition for scarce public dollars have required a sometimes painful prioritizing of government functions to provide for the public good in a fiscally prudent manner. Legislators across the United States have been searching for new and creative ways to ensure that necessary programs and services do not suffer, but in the shuffle, programs that focus on prevention, that have yet to demonstrate effectiveness, have silently been languishing in the shadows.
Impact investment--investment in nonprofit organizations and companies that address social issues--has grown to fill this void. While the majority of impact investment has focused on microfinance, farming, and other fields for which return on investment is relatively obvious, social impact bonds may be an option more uniquely suited to a state government's efforts to address issues within the social sphere.
The legislature further finds that social impact bonds connect private investors with government entities to fund social programs and services with no initial outlay of taxpayer funds. Also referred to as pay-for-success contracts, social impact bonds rely on defined and measurable outcomes to determine the rate of return, if any, on the money invested. In essence, the bonds bring together investors, nonprofits, and government to finance preventive programs expected to lead, in the long run, to overall cost savings.
For example, New York City, the first city in the United States to use social impact bonds, is currently funding programs aimed at reducing youth recidivism rates through social impact bonds "purchased" by Goldman Sachs. The Wall Street company invested $9,600,000 over four years in the programs on the projection that the programs will reduce recidivism rates by ten per cent in that time. If the outcome is met, New York City will use taxpayer funding to repay the company. If the outcome is exceeded, Goldman Sachs will receive an additional return on its investment from the city. If, instead, the defined outcome is not met, no taxpayer funds will be expended and Goldman Sachs will be out the money it invested. The legislature further finds that social impact bonds are structured to obtain proven solutions with no risk to taxpayer funds and public budgets. They are a financing tool that may, according to Mayor Michael R. Bloomberg, "empower governments to innovate in ways they wouldn't otherwise attempt."
As such, social impact bonds may be a creative and flexible way for the State to invest in early education programs and work toward ensuring that all children in the State get off to a solid and supported beginning. Therefore, the purpose of this Act is to require the executive office on early learning, in consultation with the department of budget and finance, to conduct a study on the feasibility of using social impact bonds as a means of funding early learning programs and services within the State.
SECTION 2. (a) The executive office on early learning, in consultation with the department of budget and finance, shall conduct a study on the feasibility of using social impact bonds as a means of encouraging private investment in early learning for children ages zero to five to reduce federal and state expenditures related to those services. The executive office on early learning, in consultation with the department of budget and finance, may request the assistance and services of employees of any other department, board, bureau, commission, task force, or agency as it may require and as may be available to facilitate its work.
(b) In conducting the study, the executive office on early learning, in consultation with the department of budget and finance, shall consider:
(1) The potential pool of investors likely to invest in social impact bonds both within and outside the State;
(2) The State's capacity to effectively administer a social impact bond program;
(3) Nonprofit organizations with the capacity to make effective use of funding supplied through social impact bonds and with the likelihood to meet predefined and measurable outcomes based on the following factors:
(A) The economic feasibility of programs and services provided;
(B) The degree to which the programs and services will advance statewide and local strategies and objectives;
(C) The degree to which the programs and services will maximize the leverage of other state funds; and
(D) The degree to which the programs and services align with the goals and objectives of the executive office on early learning, the improvement of social outcomes, and the stimulation of private sector investment and expansion;
(4) The size and characteristics of the target population that would benefit from early learning programs and services funded through social impact bonds;
(5) The projected financial value of the improvements that may result from social impact bond investments, including projected public sector savings and projected returns to investors;
(6) The availability of metrics to analyze projected financial value and impacts beyond financial savings and returns, such as social outcomes;
(7) Statutory changes necessary to effectuate a social impact bond program and any potential statutory prohibitions that may prevent such a program from being implemented; and
(8) Any other issues as may arise in the course of conducting the study.
(c) The executive office on early learning, in consultation with the department of budget and finance, as part of the study, shall also consider the feasibility of establishing a social impact bond pilot project. In determining the details of a pilot project, the executive office on early learning, in consultation with the department of budget and finance, shall consider the following elements:
(1) The solicitation of donations from philanthropic organizations and other private sources;
(2) Bond contract terms and conditions, including pre-defined public sector savings thresholds; and
(3) Metrics to project and measure financial and social outcomes.
(d) The executive office on early learning, in consultation with the department of budget and finance, shall submit the feasibility study and any recommendations for action, including proposed legislation, to the governor and the legislature no later than twenty days prior to the convening of the regular session of 2014. The legislative reference bureau shall assist the executive office in preparing the feasibility study, recommendations, and any proposed legislation.
SECTION 3. This Act shall take effect on July 1, 2030.
Report Title:
Social Impact Bonds; Early Education
Description:
Requires the Executive Office on Early Learning, in consultation with the Department of Budget and Finance, to conduct a study on the feasibility of using social impact bonds to fund early learning programs and services in the State. Effective July 1, 2030. (HB1402 HD2)
The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.
