BILL ANALYSIS Ó
AB 1837
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Date of Hearing: May 7, 2014
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 1837 (Atkins) - As Amended: May 1, 2014
Policy Committee: JEDE Vote:6-0
Urgency: No State Mandated Local Program:
No Reimbursable: No
SUMMARY
This bill requires the Governor's Office of Business and
Economic Development (GO-Biz) to expand the use of social
innovation financing and performance-based contracts to address
social issues, including, but not limited to, homelessness,
inmate recidivism, and workforce development. Specifically,
this bill:
1)Authorizes GO-Biz to establish an advisory board to help guide
implementation of the act.
2)Defines "social innovation financing" as an investment
arrangement using private funding to finance a social program
administered by a non-profit organization or for-profit
service provider on behalf of a government agency pursuant to
a performance-based contract.
3)Establishes the Social Innovation Account in the California
Economic Development Fund to receive federal, state, and local
governmental moneys and private moneys to be used to implement
social innovation financing methods.
4)Authorizes GO-Biz to accept nonstate moneys for the purposes
of facilitating, administering, or collaborating on social
innovation financing and implementing performance-based
contracts. Requires GO-Biz to post on its Internet Web site
prescribed information on private donations
5)Authorizes 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
AB 1837
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innovation financing methods and models.
FISCAL EFFECT
One-time General Fund costs of approximately $375,000 and
ongoing costs of approximately $200,000 for Go-Biz to administer
the program. The bill requires Go-Biz to serve as the lead
entity and provide technical assistance to local governments
that are exploring the creation of social innovation financing.
Go-Biz would also be tasked with developing model provisions for
performance-based contracts.
COMMENTS
1)Purpose . According to the author, "In times of economic
uncertainty, ongoing budget liabilities, and volatile revenue
streams, one of the biggest challenges government encounters
is finding upfront resources to invest in innovation.
California should be open to tools that encourage more
investment to accomplish measurable social benefit, save
taxpayer money, and meet public policy goals. Social
innovation financing is one such tool.
2)Background . In 2012, Massachusetts announced plans to use
social innovation financing to address two challenging
problems: Chronic homelessness and high recidivism rates among
juvenile offenders.
Several other states and local governments have initiated or
anticipate initiating projects that include performance-based
contracting models including:
New York City is seeking to reduce recidivism among
young adults.
Minnesota is seeking better outcomes relative to
workforce development and supportive housing.
New York State is addressing recidivism through
employment opportunities for high-risk adult and juvenile
ex-offenders re-entering society.
The City of Fresno, in partnership with the California
Endowment, is seeking solutions that reduce incidents of
asthma.
Analysis Prepared by : Misty Feusahrens / APPR. / (916)
AB 1837
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319-2081