Amended in Senate January 6, 2014

Amended in Senate April 23, 2013

Senate Bill No. 593

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, as amended, Lieu. Social impact partnerships: pilot begin delete project. end delete begin insert program. end insert

Existing law establishes the Office of Planning and Research and sets forth its powers and duties as the comprehensive state planning agency.

This bill would require the Office of Planning and Research to begin delete establish a pilot program to study and test the usefulness of social impact partnerships, as specified, as a mechanism for social programs operated and administered by nongovernmental organizations pursuant to a proposed contract entered into with a state agency. The bill would require the office to issue a request for applications to receive proposals for the pilot program from non-governmental organizations to address state goals in the areas of reduction of inmate recidivism, improving health care, and improving outcomes for children in the foster care system and those exiting out of the system. The bill would require the office to report its recommendations to the Governor and the Legislature on which social programs to authorize by September 15, 2014. end delete begin insert conduct the Social Impact Partnership Pilot Program. The bill would require the director of the Office of Planning and Research to identify and submit at least 3 proposed social impact partnerships to the Legislature for consideration with the May Revision of the Governor’s Budget each year beginning in 2015. The bill would create the Social Innovation Financing Trust Fund from which funds appropriated by the Legislature would be spent on contracts entered into by the office with approved applicants, as specified. The bill would authorize the office to adopt regulations to implement these provisions. The bill would also require the director to report annually to the Governor and Legislature on the status of ongoing social impact partnerships and the Social Innovation Financing Trust Fund, as specified. end insert This bill would repeal these provisions on January 1, 2020.

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.  

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.  

(a) For purposes of this title, “social impact
begin delete partnerships,” end delete begin insert partnership,” end insert also referred to as begin delete “social impact
bonds,” means a financing mechanism for social programs operated
and administered by nongovernmental organizations pursuant to
a contract entered into with a state agency. Under the contract, the
nongovernmental organization and the state agency shall agree
upon specific program goals with quantifiable target results and a
set timeframe to achieve those targets. Under the contract, the
nongovernmental organization shall pay for the entire cost of
providing the agreed upon service. If the nongovernmental
organization providing the service meets the agreed upon
quantifiable results under the contract, the state agency shall, upon
appropriation by the Legislature, reimburse the nongovernmental
organization for the cost of the service along with an agreed upon
rate of financial return. end delete begin insert a “pay for success contract,” means a
contract for services provided to address a defined demographic
group’s particular needs that are traditionally addressed through
state programs and funding therefor, in order to improve outcomes
and lower costs because payment is made only after measured
results are achieved. end insert

begin insert

(b) “Director” means the director of the Office of Planning and
Research established pursuant to Section 65037.

end insert begin delete

(b) “Office” means the Office of Planning and Research
established pursuant to Section 65037.

end delete

97001.  

(a) The begin delete office shall, in addition to its powers and duties
set forth in Article 4 (commencing with Section 65040) of Chapter
1.5 of Division 1 of Title 7, end delete begin insert Office of Planning and Research shall end insert
conduct the Social Impact Partnerships Pilot begin delete Program, which is
hereby established to study and test the usefulness of social impact
partnerships as a mechanism to help state agencies meet their
statutory goals in an efficient and cost-effective manner. end delete begin insert Program. end insert

begin insert

(b) (1) The director shall identify and submit at least three
proposed social impact partnerships to the Chair of the Assembly
and Senate Budget Committees and the Chair of the relevant
subcommittee for consideration with the May Revision of the
Governor’s Budget each year beginning in 2015.

end insert begin insert

(2) Prior to the submission of any proposed social impact
partnerships, the director shall consult with the appropriate state
agency or department responsible for administering any affected
state program.

end insert begin delete

(b) The office shall issue a request for applications to receive
proposals from nongovernmental organizations to address the state
goals under subdivision (b) of Section 97002.

end delete begin delete

(c) The request for applications shall require proposals to include
all of the following:

end delete begin delete

(1)

end delete begin insert

(3) At a minimum, each submission shall include all of the
following:

end insert

begin insert (A) end insert  A description of begin delete how end delete the proposed social begin delete program will meet
the state goals under subdivision (b) of Section 97002. end delete begin insert program. end insert

begin delete

(2)

end delete

begin insert (B) end insert  A description of the organization’s experience in providing
the proposed social program.

begin delete

(3)

end delete

begin insert (C) end insert  A description of the financial stability of the organization.

begin delete

(4)

end delete

begin insert (D) end insert  An identification of each component of the social program
to be provided.

begin delete

(5)

end delete

begin insert (E) end insert  A description of how the social program will be provided.

begin delete

(6)

end delete

begin insert (F) end insert  A description of the recruitment or selection process, or
both, for participants in the social program.

begin delete

(7)

end delete

begin insert (G) end insert  The proposed quantifiable results upon which success of
the social program will be measured.

begin delete

(8)

end delete

begin insert (H) end insert  An itemization of all expenses proposed to be reimbursed
under the contract.

begin delete

97002.  

(a) The pilot program shall consist of contracts with
nongovernmental organizations to accomplish the state goals under
subdivision (b).

(b) In order to adequately test and fully evaluate the social
impact partnership model, the pilot program shall be designed to
achieve three state goals, as follows:

(1) Reduce recidivism rates for the incarcerated population of
this state.

(2) Improve health care. The focus of the pilot program is to
further the triple aims of health care reform which includes
improving health quality, reducing costs, and improving the patient
experience. The social programs under this paragraph shall focus
on low-income or underserved communities, or both. The social
programs under this paragraph may include, but are not limited
to, programs that reduce emergency room visits and
hospitalizations, incentivize the use of primary care and
preventative health services, and coordinate the care of patients
across health care settings and providers.

(3) Improve outcomes for children under the jurisdiction of the
foster care system or those exiting out of the system. Those
outcomes include, but are not limited to, improving the health and
well-being of the children.

97004.  

The pilot program shall be outcome oriented, and
payment to the nongovernmental organizations under the contract
shall be based on the successful completion of the terms of the
contract. These terms shall be determined and approved by the
office in coordination with the relevant state department or agency.

97005.  

The office shall report its recommendations to the
Governor and the Legislature by September 15, 2014, regarding
which social programs to authorize. The recommendations shall
include proposed contracts with specific nongovernmental
organizations for specific social programs. The contracts shall also
include metrics for determining the success of the social programs
and the terms governing the proposed rate of financial return.

end delete begin insert

begin insert 97002. end insert   

(a) Upon appropriation of sufficient funds by the
Legislature, the director shall enter into a contract with the
approved applicant.

(b) Each contract shall include all of the following:

(1) A requirement that the payment be conditioned on the
achievement of specific outcomes based upon defined performance
targets.

(2) An objective process by which an independent evaluator,
selected by the director, will determine whether the performance
targets have been achieved.

(3) A calculation of the amount and timing of payments that
would be earned by the service provider during each year of the
agreement if performance targets are achieved as determined by
the independent evaluator.

(4) A determination by the director that the contract will result
in significant performance improvements and budgetary savings
across impacted agencies or departments if the performance targets
are achieved.

(c) The director shall not enter into any contract that exceeds
the funds appropriated for it by the Legislature.

end insert begin insert

begin insert 97003. end insert   

(a) The Social Innovation Financing Trust Fund is
hereby created in the State Treasury. All funds appropriated by
the Legislature pursuant to Section 97002 shall be deposited into
the Social Innovation Financing Trust Fund.

(b) Social impact partnership contracts entered into by the office
with approved applicants shall be paid from the Social Innovation
Financing Trust Fund.

end insert begin insert

begin insert 97004. end insert   

The Office of Planning and Research may adopt
regulations to implement this title.

end insert begin insert

begin insert 97005. end insert   

The director shall report annually to the Governor and
Legislature on the status of each ongoing social impact
partnership, including, but not limited to, a description of the
desired outcome and an overview of the independent evaluator’s
findings. The report shall also contain an accounting of the Social
Innovation Financing Trust Fund.

end insert

97006.  

This title shall not create a statutory entitlement to
services or any contractual obligation on the part of the state. It is
the intent of the Legislature that a proposed contract under Section
begin delete 97005 end delete begin insert 97001 end insert is subject to legislative review and approval before
its execution, and that any appropriation only occur after the review
and approval.

97007.  

This title shall be repealed on January 1, 2020.

begin delete

 

Chapter  2. Social Impact Partnership to Reduce
Recidivism

 

97020.  

(a) The office shall, in consultation with the Department
of Corrections and Rehabilitation, issue a request for applications
for two social impact partnerships to reduce recidivism at the state
or county incarceration facilities, or both.

(b) The office shall consult with the Department of Corrections
and Rehabilitation to review received applications and the proposed
contracts negotiated with the selected applicants.

end delete begin delete

 

Chapter  3. Social Impact Partnership to Improve Health
Care

 

97030.  

(a) The office shall, in consultation with the California
Health and Human Services Agency, issue a request for
applications for two social impact partnerships to improve health
care.

(b) The office shall consult with the California Health and
Human Services Agency to review received applications and the
proposed contracts negotiated with the selected applicants.

end delete begin delete

 

Chapter  4. Social Impact Partnership to Improve
Outcomes for Foster Children and Those Exiting Out of
the Foster Care System

 

97040.  

(a) The office shall, in consultation with the California
Health and Human Services Agency, issue a request for application
for two social impact partnerships to improve outcomes for foster
children and those exiting out of the system including, but not
limited to, their health care and well-being.

(b) The office shall consult with the California Health and
Human Services Agency to review received applications and the
proposed contracts negotiated with the selected applicants.

end delete