BILL NUMBER: AB 1837 AMENDED
BILL TEXT
AMENDED IN ASSEMBLY MAY 1, 2014
INTRODUCED BY Assembly Member Atkins
( Coauthors: Assembly Members
Fox, Medina, and V. Manuel Pérez
)
FEBRUARY 18, 2014
An act to amend Section 13997.6 of, and to add
Section 12096.3.7 to Article 4.5 (commencing with
Section 12096.6) to Chapter 1.6 of Part 2 of Division 3 of Title 2
of, the Government Code, relating to state government.
LEGISLATIVE COUNSEL'S DIGEST
AB 1837, as amended, Atkins. Governor's Office of Business and
Economic Development. Development: social
innovation financing.
The Economic Revitalization Act establishes the Governor's Office
of Business and Economic Development, also known as "GO-Biz,"
to, "GO-Biz." GO -Biz, among other
duties, serve serves the Governor as
the lead entity for economic strategy and the marketing of California
on issues relating to business development, private sector
investment, and economic growth.
This bill would require GO-Biz to serve as the lead entity for
efforts to explore social innovation financing, defined as
an investment arrangement using private funding to finance a social
program administered by a nonprofit organization or for-profit
service provider on behalf of a government agency pursuant to a
performance-based contract. This financing, as
defined. The bill would also require GO-Biz to develop
model provisions for recommendations for implementing
social innovation finance models, including performance-based
contracts that allow private investors to provide upfront
financing to service providers to achieve preagreed upon social
outcomes and require a contracting government agency to pay the
private investor a return on investment if successful programmatic
outcomes are achieved by the service provider.
contracts, as defined, for achieving measurable social benefits. The
bill would authorize GO-Biz to establish an advisory board to help
guide the implementation of the act.
Other existing law creates the California Economic Development
Fund in the State Treasury for the purpose of receiving federal,
state, local, and private economic development funds, and receiving
repayment of loans or grant proceeds and interest on those loans or
grants.
The bill would establish the Social Innovation Account within the
fund for the purpose of receiving federal, state, and local
governmental moneys and private moneys to be used to implement social
innovation financing methods. The bill would authorize GO-Biz to
accept nonstate moneys for the purposes of facilitating,
administering, or collaborating on social innovation financing and
implementing performance-based contracts. The bill would require
GO-Biz to post on its Internet Web site prescribed information on
private donations. The bill would authorize GO-Biz to expend moneys
in the account, upon appropriation, to make payments to private
investors and service providers and to fund other expenditures
directly related to performance-based contracts and other social
innovation financing methods and models.
This
The bill would also make legislative findings and
declarations in this regard.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: no.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. The Legislature finds and declares all of the
following:
(a) It is the intent of the Legislature to establish partnerships
between government governmental
agencies, private investors, nonprofit organizations, and for-profit
service providers to facilitate the use of social innovation
financing to achieve measurable social benefits.
(b) Social innovation financing and the use of performance-based
contracting can serve as an effective tool for addressing social and
community development challenges where private sector innovations may
be useful and multiple approaches may be appropriate. Research shows
that the selection and design of these types of social interventions
should be done with care in order to ensure successful outcomes.
Among other criteria, selected projects should meet the following
requirements:
(1) Address social needs that are unmet, high priority, and
large-scale.
(2) Address target populations that are well-defined and can be
measured with scientific rigor.
(3) Result in outcomes that are credible and readily available by
cost-effective means.
(4) Propose interventions that are highly likely to achieve
targeted impact goals.
(5) Be carried out by proven service providers that are prepared
to scale with quality.
(6) Include safeguards to protect the well-being of the
populations served.
(7) Be cost-effective programs that can demonstrate financial
savings for government.
(b)
(c) The focus of initial social innovation financing
efforts should be towards toward
decreasing recidivism rates in our criminal justice system, reducing
homelessness, and promoting workforce development.
SEC. 2. Section 12096.3.7 is added to the
Government Code, to read:
12096.3.7. (a) The office shall serve as the lead entity for
efforts to explore social innovation financing and provide technical
assistance to local governments that are exploring the creation of
social innovation financing.
(b) The office shall develop model provisions for
performance-based contracts.
(c) For purposes of this section only, the following terms shall
have the following meanings:
(1) "Performance-based contracts" means contractual agreements
between government, private investors, and service providers where
private investors agree to provide upfront financing to service
providers to achieve preagreed upon social outcomes and the
government agency agrees to pay a return on investment to the
investors if successful programmatic outcomes are achieved by the
service provider.
(2) "Social innovation financing" means an investment arrangement
using private funding to finance a social program administered by a
nonprofit organization or for-profit service provider on behalf of a
government agency pursuant to a performance-based contract.
SEC. 2. Article 4.5 (commencing with Section
12096.6) is added to Chapter 1.6 of Part 2 of Division 3 of Title 2
of the Government Code , to read:
Article 4.5. Social Innovation Financing
12096.6. (a) The office shall serve as the lead entity for
efforts to explore social innovation financing and provide technical
assistance to local governments that are exploring the creation of
social innovation financing.
(b) The office shall develop recommendations for implementing
social innovation finance models, including performance-based
contracts for achieving measurable social benefits. These
recommendations shall include, but are not limited to, the following:
(1) Strategies for engaging with private investors, nonprofit
organizations, and for-profit and nonprofit service providers.
(2) Parameters for determining which projects are appropriate for
performance-based contracts.
(3) Parameters for establishing baseline, setting performance
metrics, and measurable outcomes.
(4) A model for a performance-based contract, including parameters
for writing a statement of work and quality standards that
encompasses the requirements of paragraph (3).
(c) The office may establish an advisory board to help guide the
implementation of this chapter.
(d) As used in this section only:
(1) "Performance-based contracts" means contractual agreements
between government, private investors, and service providers where
private investors agree to provide up-front financing to service
providers to achieve social outcomes agreed upon in advance and the
government agency agrees to pay a return on investment to the
investors if successful programmatic outcomes are achieved by the
service provider.
(2) "Social innovation financing" means an investment arrangement
using private funding to finance a social program administered by a
nonprofit organization or for-profit service provider on behalf of a
government agency pursuant to a performance-based contract.
SEC. 3. Section 13997.6 of the
Government Code is amended to read:
13997.6. (a) The California Economic Development Fund is hereby
created in the State Treasury for the purpose of receiving federal,
state, local, and private economic development funds, and receiving
repayment of loans or grant proceeds and interest on those loans or
grants.
(b) Upon appropriation by the Legislature, moneys in the
fund California Economic Development Fund may be
expended by the Governor's Office of Business and Economic
Development to provide matching funds for loans or grants to public
agencies, nonprofit organizations, and private entities, and for
other economic development purposes, consistent with the purposes for
which the moneys were received.
(c) (1) The Social Innovation Account is hereby established within
the California Economic Development Fund for the purpose of
receiving federal, state, and local governmental moneys and private
moneys that will be used to implement social innovation financing
methods including performance-based contracts, as defined and
authorized in Section 12096.6.
(2) (A) The Governor's Office of Business and Economic Development
may accept nonstate moneys, including, but not limited to, private
sector funds, for the purposes of facilitating, administering, or
collaborating on social innovation financing and implementing
performance-based contracts.
(B) The Governor's Office of Business and Economic Development,
for each private donation that it receives to fund a social
innovation finance activity or performance-based contract, shall post
a report on its Internet Web site within 30 days of receiving that
donation. The report shall contain all of the following information:
(i) The name and address of the donor.
(ii) The amount of the donation.
(iii) The date the donation was made.
(iv) The name and address of the entity receiving or using the
donation.
(v) A brief description of the goods or services provided or
purchased, if any.
(vi) A description of the specific purpose or event for which the
donation was made, if any.
(3) Upon appropriation by the Legislature, the Governor's Office
of Business and Economic Development may expend moneys in the Social
Innovation Account to make payments to private investors and service
providers and to fund other expenditures directly related to
performance-based contracts and other social innovation financing
methods and models.